What makes a speaker thousands more...

Often things work in reverse. The manufacturer decides to offer a speaker at a given price point, and then designs a speaker that it can sell profitably at that price point (or points, if it's designing a whole line of speakers). The price is, as the saying goes, "what the market will bear," and that depends on such factors as what the competition is offering. And, since many consumers (present company excepted) use price as a signal of quality, prices are sometimes set to impress those consumers. This may be less true for speakers and electronics than for other high-end products.

Jeff's post is excellent. Speakers are the highest margin items in this industry. For a manufacturer to maintain R&D, marketing, sales and distribution they must make 50% gross margin, but most will make more. Many speaker lines carry 60% margin to the dealers. That means for a speaker that costs $500 to build it will sell to the dealer for at least $1000 and then to the consumer for $2200. Now if you increase your parts cost by $200 (or manufacturing cost), then it sells to the dealer for $1400 and to the consumer upwards of $3400. Electronics don't have these kinds of margins for the dealers, mostly due to their expense in parts and manufacturing and competition --as Jostler says: "What the market will bear".

I disagree with Abstract7 only in that, in my view, cables are the highest margin items in the industry (phono cartridges too, but they're an art in the labor, so I'll live with that).

The cosmetics of most high end audio contributes a lot to the high costs . I look for value, for example I have a used pair of Aerial 10t s that I think slam many other speakers costing much more! Michael Kelly at Aerial is a great person to talk to for more information as he is the president & designer/engineer of the company. The cost vs value of the super high end stuff gets very slim . I also like the Utopia line of speakers (Focal Drivers). Big used speakers tend to offer excelent value if you can pick them up . People dont want to ship 200 # speakers across the country. Listen with your ears not with you nose up in the air. NHT makes some great very musical speakers that are almost cheap enough for circut city ! And dont let the exotic wood finishes spend your money !

I agree with Rcprince--I was only considering speakers and main electronics (not power conditioning--which might also be in the margin stratosphere).